In 1962, the New York
City planning commission issued a report on what to do with the area of
dilapidated warehouses and industrial lofts lying between Greenwich Village and
Wall Street. Entitled "The Wastelands of New York City," the report proposed
demolishing the area to make way for the Lower Manhattan Expressway.

Plans for the
Lower Manhattan Expressway never came to fruition, and the area of run down
lofts and warehouses, once slated for demolition, is now known as SoHo. One of
the coolest, hippest places on the planet, SoHo boasts high concentrations of
actors, artists, filmmakers and photographers along with renowned art galleries,
stylish bars, and trendy restaurants.

In the early
1980’s, the leaders of Flint, Mich. announced plans of their own. They wanted
to make downtown Flint into a hip tourist Mecca. Plans called for a new
shopping center, a new luxury hotel, and a theme park. After spending over $70
million, that plan today is known simply as the disaster "AutoWorld."

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What was the
difference that determined success in the one case, and failure in the other?
Gov. Jennifer Granholm should ponder the answer to that question. She is
creating a "cool cities" advisory panel and calling upon 250 Michigan cities to do the same. She hopes that 251 new government commissions will come
up with ideas that can revive depressed urban areas.

Why did SoHo succeed
while Flint failed? Did New York’s development bureaucrats figure out a better
way to accomplish their goal than did Flint’s? Nope. In fact, SoHo historian
Richard Kostelanetz argues that the lack of centralized planning was essential
to SoHo’s success. He claims SoHo succeeded because its development flew below
the radar screens of control-seeking bureaucrats, politically connected
developers, and local zoning bureaucracies. In short, SoHo succeeded because
government planning wasn’t involved at all.

In
fact, it was openly opposed. Kostelanetz tells the story of a feisty Lithuanian
immigrant named Maciunas, who came to New York to study art, but who also had
tremendous talent as a real estate developer, and was extraordinarily disdainful
of abiding by the law. According to The Village Voice, "By 1968, 10 years
before his death, Maciunas had used nearly 17 buildings to create 11 co-ops for
artists," around which the SoHo community formed. "He did every transaction in
cash, commingled funds, and basically broke every rule in the book. The
authorities were after him for years," Kostelanetz told The Voice.

The point is that if
governments want "cool cities" to grow up in their midst, government planners
will have very little to do with it. The best thing the bureaucrats can do is
to perform the core functions of government well — and otherwise get out of the
way.

Sadly, the state
of Michigan abounds with examples of bureaucratic pipe dreams and overzealous
regulation that strangle the life out of our cities at the same time that vital
services like infrastructure, schools and police protection are allowed to
decay.

Consider the
following:

In 1998, Detroit Mayor
Dennis Archer announced a plan to demolish the area of old warehouses and
industrial lofts along the Detroit River to make way for three permanent
casinos. Known as "Rivertown," the area contained some of the city’s most
successful bars and restaurants, including a legendary blues club, the Soup
Kitchen Saloon. With the area in legal limbo, no development took place in this
prime area for years. Then, after spending $140 million taxpayer dollars to
acquire land in the area, the City of Detroit abruptly abandoned plans to locate
casinos there. Today, the area of once-popular bars and nightclubs is a
wasteland.

In 1997, developers in
Birmingham began buying lots with small houses on them, tearing them down, and
rebuilding larger ones. While some saw this as good news, since it kept
developers from building houses further out in the country and contributing to
urban sprawl, the Birmingham city council saw it as bad news and passed
restrictive zoning laws effectively limiting the construction of houses they
considered to be "too big." What’s the answer to "urban sprawl" when the
government shuts down the private sector even when it finds areas within cities
profitable for development?

With a maze of zoning
laws, licenses, regulations, a difficult labor climate and an overall tax burden
that is still too high, Michigan is its own worst enemy when it comes to
fostering entrepreneurship and attracting the talented and creative.

Our state and its city
governments would do better to focus on their more important functions (schools,
roads and public safety, for example), which they perform in ways that are
anything but cool. In Detroit, for example, an opportunity to accept a free
gift of $200 million for 15 new charter schools was actually
sabotaged by politicians and unions more interested in power than kids.

If Gov. Granholm is
serious about creating cool cities and attracting entrepreneurs, she could start
by relying less on fellow politicians and government commissions and implement
the following:

Encourage open,
competitive bidding for many city services. "Cool" cities like Indianapolis and
Phoenix do it all the time while "uncool" cities like Detroit and Flint rely too
heavily on bloated bureaucracies and costly union work rules.

Cut the red tape and excessive licensing that restrict persons from
earning a living
without explicit state approval. The state regulates an absurd number of
professions, including "ginseng growers" and "minnow salesmen."

Push for a state constitutional amendment that would allow tax
credits for contributions to either public or private schools. Mackinac Center
research indicates that nothing could improve inner-city schools more than
choice, competition and accountability.

Protect property
rights by reforming "eminent domain" laws that allow politicians to seize
private property for purposes that often look a lot more "private" than they do
"public."

Get cities like
Detroit to lift their stifling rules against home-based businesses.

Relax Historic
Preservation Laws. Often these laws are so complex and time-consuming, they
interfere with renovations and make it harder to preserve historic structures.

Keep cutting marginal
tax rates. Michigan is still a high-tax state and some of its cities are among
the most heavily taxed in the country. This serves as a disincentive for the
talented and creative to live and work here. There is nothing cool about
Detroit’s per-capita tax burden being several times the average for Michigan
municipalities.

Of course, the most
difficult step of all is the one government would have to take once all of the
above steps are accomplished: Leave things alone. If the story of SoHo is any
indication, the private sector will take care of the rest.

#####

(Lance J. Weislak, a graduate
of the University of Michigan, is earning his MBA at the University of Chicago
Graduate School of Business, and is an adjunct scholar with the Mackinac Center
for Public Policy. Michael LaFaive is director of fiscal policy at the Mackinac
Center, a research and educational institute headquartered in Midland, Mich.
More information is available at
www.mackinac.org. Permission to reprint in
whole or in part is hereby granted, provided the author and his affiliation are
cited.)